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3 Reasons to Consider an Acquisition

Acquisitions can seem like an exciting strategy to grow your business, offering a fast-track to quick growth and scale. Big companies do acquisitions! The prospect of doing one for your own company can be alluring…..

Before you go down this path and spend time and energy focusing on what may not be the right strategy for your company, here’s a 3-point mini-checklist to use as your initial screening criteria for considering an acquisition:1. Speed
You may need to grow faster. Wanting to grow faster is not the same as needing to. You may need to grow faster because:

You have a timeframe on reaching certain growth targets set by you, your business partner(s) or even investors (who may need to invest further to enable your acquisition)

You may be part of a bigger group/entity that expects you to keep pace with the growth of the rest of the group

You may have a life cycle for your business before you need to sell out (based on your personal goals or market trends and timing)

2. Scale
You need to scale up your business. This is very closely aligned with Speed as speed enables scale.
Reasons for needing scale may be related to:

Playing a bigger game by being able to acquire bigger clients (which is more feasible when you are a bigger player in the market)

Acquiring market share to remain a viable player

Growing your client base to better utilise existing resources and overheads more efficiently – do more with less and become more profitable

3. Scope
This is very closely related to Scale! If you need new scope in your business you may be considering growth through avenues that aren’t currently available to your core existing business, such as:

New geographic markets

New client segments, or

New products and services

This is very simple initial screening test to consider if an acquisition is potentially worth considering for your business, for now. If you need to scale up your business or find new scope to grow, and speed is the key, then maybe acquisition is worth considering. But that’s only the first step if you decide to go down this path. The next steps need far more indepth consideration and assessment!